Case Law Details
Brief of the Case
ITAT Mumbai held In the case of M/s. Rachana Finance & Investments Pvt. Ltd. & M/s. Repute Properties Pvt. Ltd. vs. CIT that in the present case, the order of AO may be brief but that by itself is not a sufficient reason to hold the order of assessment as erroneous and prejudicial to the interest of the revenue. The scope of interference u/s 263 is not to set aside merely unfavorable orders and bring to tax some more money to the treasury nor is the section meant to get at sheer escapement of revenue which is taken care of by other provisions in the Act. Power under Section 263 cannot be exercised for starting fishing and roving enquiries. In the current case, since the AO has examined the issue by making necessary enquiries, the assessment order cannot be held erroneous and also the view taken by the AO is one of the possible views, the assessment order cannot be held to be prejudicial to the interest of revenue. Hence, revision order is not sustainable.
Facts of the Case
The assessee filed return of income for AY 2004-05 on 15.11.2004 declaring total income at Rs.6,658/-. Thereafter the case was reopened on 31.03.2011. After considering the case of both the parties, the AO passed assessment order u/s 143(3) r.w.s. 147 on 28.10.2011. Whereby the total income of assessee company was assessed at Rs.6,658/-. CIT noted that the assessee has invested an amount of Rs.25 lakhs by way of share application and share premium in share of M/s. Turkhia Group of Companies and noticed that the assessing officer has not verified the issue regarding the high share premium paid by assessee to M/s. Turkhia Group of Companies therefore after serving show cause notice and considering reply, the CIT passed order u/s 263.
Contention of the Assessee
The ld counsel of the assessee submitted that the assessment order passed u/s 143 r.w.s. 147 dated 28.10.2011 by the assessing officer is neither erroneous nor prejudicial to the interest of revenue and the provision of section 263 were not at all attracted under the facts and circumstances of the case. It was further submitted by ld. AR that the assessment was reopened on the ground of examination of source of investment made by assessee of Rs.25 lacs towards acquisition of shares from one company M/s. Turakhia Feromat Pvt. Ltd. The amount was received from Shirdi Industries Ltd. and the bank statement was also submitted on record where in the amount received by the assessee company was reflected. The copy of bank statement of Shirdi Industries Ltd. and copy of acknowledgement of said company were also submitted before the AO. Assessing Officer after detailed examination and making full inquiries in the matter passed the assessment order and therefore there is no case of the said order being erroneous.
The ld. AR further submitted that the department made inquiries for justification of premium for issuing of shares in the case of recipient company who received the money and issued the shares and since no share application money was received by the assessee therefore the examination of justification of share premium was not at all warranted in the case of the assessee for which the assessee also relied upon judgement of co-ordinate bench in case of M/s. Turakhia Feromat Pvt. Ltd. passed by ITAT Mumbai Bench and as per the aforesaid mentioned judgement ITAT was pleased to set aside the similar order passed u/s 263.
Contention of the Revenue
The ld counsel of the revenue relied upon the orders passed by CIT (A) u/s 263 and it was submitted that since the assessing officer failed to examine the issue of share application and share premium while completing the assessment u/s 143 r.w.s 147 dated 28.10.2011 therefore, the CIT (A) was right in passing the order u/s 263.
Held by ITAT
ITAT held that it is clear that the commissioner has to be satisfied with the twin conditions :(I) the order of the AO sort to be revised is erroneous and (II) it is to be prejudicial to the interest of the revenue. If one of the condition is absent it cannot be invoke jurisdiction u/s 263. We find support from the decision of Hon’ble Supreme Court, in case of ‘Malabar Industrial Co. Ltd vs. CIT’ (SC) 243 ITR 83. In the present case the assessing officer after detailed examination of records had passed the assessment order and the said facts are also mentioned by the assessing officer while passing the order u/s 143 r.w.s. 147 of the Act wherein it has been categorically mentioned by the AO that the representative of the assessee furnished relevant details and after discussing the total income of the assessee company was assessed which shows the consideration of all the documents and application of mind by the AO. It is also an undisputed fact that there is no further evidence which has come on record after passing of order by AO. Since the AO has examined the issue by making necessary enquiries, the assessment order cannot be held erroneous. Since the view taken by the AO is one of the possible views the assessment order cannot be held to be prejudicial to the interest of revenue.
Further the order of AO in the present case may be brief but that by itself is not a sufficient reason to held the order of assessment as erroneous and prejudicial to the interest of the revenue. The scope of interference u/s 263 is not to set aside merely unfavorable orders and bring to tax some more money to the treasury nor is the section meant to get at sheer escapement of revenue which is taken care of by other provisions in the Act. Power under Section 263 cannot be exercised for starting fishing and roving enquiries. In the garb of exercising power under Section 263, the Commissioner cannot initiate proceedings with a view to starting fishing and roving enquires in matters or orders which are already concluded. After considering the entire facts and material evidences brought on record reproduced elsewhere in the order by us, in our considered view the order of CIT u/s 263 does not stand on its own leg, we accordingly set aside the order of CIT and restore that of the AO.
Accordingly appeal of the assessee allowed.
